Exhibit(d)(2)
SUBADVISORY AGREEMENT
AGREEMENT made as of the 30th day of September, 2002, by and between
Deutsche Investment Management Americas Inc. (hereinafter called the "Manager"),
and Deutsche Asset Management Investment Services Limited (hereinafter called
the "Subadviser").
WITNESSETH:
WHEREAS, Xxxxxxx New Europe Fund, Inc. (the "Corporation") is a
Maryland corporation organized with one or more series of shares, and is
registered as an investment company under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Corporation and the Manager have entered into an
Investment Management Agreement on behalf of Xxxxxxx New Europe Fund, a series
of the Corporation (the "Series"), dated April 5, 2002, pursuant to which the
Manager acts as investment manager of the Series;
WHEREAS, the Manager desires to utilize the services of the Subadviser
as investment counsel with respect to certain portfolio assets of the
Corporation; and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, it is agreed as follows:
1. The Subadviser's Services. The Subadviser will serve the Manager as
investment counsel with respect to all or a portion of the investment portfolio
of the Series, as may be determined from time to time by the Manager.
The Subadviser is hereby authorized and directed and hereby agrees,
subject to the stated investment policies and restrictions of the Series as set
forth in the current Prospectus and Statement of Additional Information of the
Corporation and/or the Series, including amendments (the "Registration
Statement"), in accordance with the Declaration of Corporation and By-laws of
the Corporation, as both may be amended from time to time, governing the
offering of its shares, subject to such resolutions, policies and procedures as
from time to time may be adopted by the Directors of the Corporation and
furnished to the Subadviser, and to the extent requested by the Manager, to
develop, recommend and implement such investment program and strategy for the
Series as may from time to time be most appropriate to the achievement of the
investment objectives of the Series as stated in the Registration Statement, to
provide research and analysis relative to the investment program and investments
of the Series, to determine what securities should be purchased and sold and to
monitor on a continuing basis the performance of the portfolio securities of the
Series. In addition, if requested by the Manager, the Subadviser will place
orders for the purchase and sale of portfolio securities and, subject to the
provisions of the following paragraph, will take reasonable steps to assure that
portfolio transactions are effected at the best price and execution available.
The Subadviser will advise the Series' custodian and the Manager on a prompt
basis of each purchase and sale of a portfolio security specifying the name of
the issuer, the description and amount or number of shares of the security
purchased, the
market price, commission and gross or net price, trade date, settlement date and
identity of the effecting broker or dealer. From time to time as the Directors
of the Corporation or the Manager may reasonably request, the Subadviser will
furnish to the Manager, Corporation's officers and to each of its Directors
reports on portfolio transactions and reports on assets held in the Series, all
in such detail as the Corporation or the Manager may reasonably request. The
Subadviser will also inform the Manager, Corporation's officers and Directors on
a current basis of changes in investment strategy or tactics or any other
developments materially affecting the Series. The Subadviser will make its
officers and employees available to meet with the Manager, Corporation's
officers and Directors at least quarterly on due notice and at such other times
as may be mutually agreeable, to review the investments and investment
performance of the Series in the light of the Corporation's investment
objectives and policies and market conditions.
In using its best efforts to obtain for the Series the most favorable
price and execution available, the Subadviser, bearing in mind the Series' best
interests at all times, shall consider all factors it deems relevant, including,
by way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Directors of the Corporation may determine, the
Subadviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Series to pay an unaffiliated broker or dealer that provides
brokerage and research services to the Subadviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Subadviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Subadviser's overall responsibilities with respect
to the clients of the Subadviser for whom the Subadviser exercises investment
discretion.
It shall be the duty of the Subadviser to furnish to the Directors of
the Corporation such information as may reasonably be requested in order for
such Directors to evaluate this Agreement or any proposed amendments thereto for
the purposes of casting a vote pursuant to Section 9 hereof.
In the performance of its duties hereunder, the Subadviser is and shall
be an independent contractor and except as otherwise expressly provided herein
or otherwise authorized in writing, shall have no authority to act for or
represent the Corporation, the Series or the Manager in any way or otherwise be
deemed to be an agent of the Corporation, the Series or the Manager.
In furnishing the services under this Agreement, the Subadviser will
comply with the requirements of the 1940 Act applicable to it, and the
regulations promulgated thereunder, and all other applicable laws and
regulations. The Subadviser will immediately notify the Manager and the
Corporation in the event that the Subadviser: (i) becomes subject to a statutory
disqualification that prevents the Subadviser from serving as an investment
adviser pursuant to this Agreement; or (ii) is or expects to become the subject
of an administrative proceeding or enforcement action by the Securities and
Exchange Commission or other regulatory authority. The Subadviser will
immediately forward, upon receipt, to the Manager any correspondence from the
Securities and Exchange Commission or other regulatory authority that relates to
the Series.
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2. Delivery of Documents to Subadviser. The Manager will furnish to the
Subadviser copies of each of the following documents:
(a) The Article of Incorporation of the Corporation as in effect
on the date hereof;
(b) The By-laws of the Corporation in effect on the date hereof;
(c) The resolutions of the Directors approving the engagement of
the Subadviser as subadviser to the Series and approving the
form of this agreement;
(d) The resolutions of the Directors selecting the Manager as
investment manager to the Corporation and approving the form
of the Investment Management Agreement with the Corporation,
on behalf of the Series;
(e) The Investment Management Agreement with the Corporation, on
behalf of the Series;
(f) The Code of Ethics of the Corporation and of the Manager as
currently in effect;
(g) Current copies of the Series' Prospectus and Statement of
Additional Information; and
(h) Resolutions, policies and procedures adopted by the Directors
of the Corporation in respect of the management or operation
of the Series.
The Manager will furnish the Subadviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to Items
(a) though (g) above will be provided within 30 days of the time such materials
became available to the Manager and until so provided the Subadviser may
continue to rely on those documents previously provided.
During the term of this Agreement, the Manager also will furnish to the
Subadviser prior to use thereof copies of all Corporation documents, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of the Series or the public that refer
in any way to the Subadviser, and will not use such material if the Subadviser
reasonably objects in writing within five business days (or such other time
period as may be mutually agreed) after receipt thereof. However, the Manager
and the Subadviser may agree amongst themselves that certain of the
above-mentioned documents do not need to be furnished to the Subadviser prior to
the document's use.
In the event of termination of this Agreement, the Manager will
continue to furnish to the Subadviser copies of any of the above-mentioned
materials that refer in any way to the Subadviser. The Manager shall furnish or
otherwise make available to the Subadviser such other information relating to
the business affairs of the Corporation as the Subadviser at any time, or from
time to time, reasonably requests in order to discharge its obligations
hereunder.
3. Delivery of Documents to the Manager. The Subadviser has furnished
the Manager with copies of each of the following documents:
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(a) The Subadviser's most recent balance sheet;
(b) Separate lists of persons who the Subadviser wishes to have
authorized to give written and/or oral instructions to
Custodians and the fund accounting agent of Corporation assets
for the Series;
(c) The Code of Ethics of the Subadviser as currently in effect;
and
(d) Any compliance manuals, trading, commission and other reports,
insurance policies, and such other management or operational
documents as the Manager may reasonably request in writing (on
behalf of itself or the Directors of the Corporation) in
assessing the Subadviser.
The Subadviser will maintain a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide the
Corporation with a copy of the code of ethics, including any amendments thereto,
and evidence of its adoption. Within 45 days of the end of each year while this
Agreement is in effect (or more frequently if required by Rule 17j-1 or as the
Corporation may reasonably request), an officer of the Subadviser shall certify
in writing to the Corporation that the Subadviser has complied with the
requirements of Rule 17j-1 during the previous year and that there has been no
violation of its code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Subadviser shall
also certify to the Corporation with respect to such other matters as may be
required by Rule 17j-1. Upon the written request of the Corporation, the
Subadviser shall permit Corporation to examine the reports to be made by the
Subadviser under Rule 17j-1(d) and the records the Subadviser maintains pursuant
to Rule 17j-1(f).
The Subadviser will furnish the Manager from time to time with copies,
properly certified or otherwise authenticated, of all material amendments of or
supplements to the foregoing, if any. Additionally, the Subadviser will provide
to the Manager such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic basis. Such
amendments or supplements as to items (a) through (c) above will be provided
within 30 days of the time such materials became available to the Subadviser.
The Subadviser will promptly notify the Manager of any proposed
transaction or other event that could reasonably be expected to result in an
"assignment" of this Agreement within the meaning of the 1940 Act. In addition,
the Subadviser will promptly complete and return to the Manager any compliance
questionnaires or other inquiries submitted to the Subadviser in writing.
4. Other Agreements, etc. It is understood that any of the
shareholders, Directors, officers and employees of the Corporation or the Series
may be a shareholder, director, officer or employee of, or be otherwise
interested in, the Subadviser, any interested person of the Subadviser, any
organization in which the Subadviser may have an interest or any organization
which may have an interest in the Subadviser, and that any such interested
person or any such organization may have an interest in the Corporation or the
Series. It is also understood that the Subadviser, the Manager and the
Corporation may have advisory, management, service or other contracts with other
individuals or entities, and may have other interests and businesses. When a
security proposed to be purchased or sold for the Series is also to be purchased
or sold for other
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accounts managed by the Subadviser at the same time, the Subadviser shall make
such purchases or sales on a pro-rata, rotating or other equitable basis so as
to avoid any one account's being preferred over any other account.
The Subadviser may give advice and take action with respect to other
funds or clients, or for its own account which may differ from the advice or the
timing or nature of action taken with respect to the Series.
Nothing in this Agreement shall be implied to prevent the (i) Manager
from engaging other subadvisers to provide investment advice and other services
in relation to any of the portfolios of the Corporation, including the Series,
or to prevent the Manager from providing such services itself in relation to
such portfolios; or (ii) the Subadviser from providing investment advice and
other services to other funds or clients.
5. Fees, Expenses and Other Charges.
(a) For the services provided and the expenses assumed pursuant to
this Agreement, the Manager will pay the Subadviser, and the
Subadviser will accept as full compensation therefor, fees,
computed daily and payable monthly, on an annual basis equal
to the percentage set forth on Exhibit A hereto of the average
daily net assets of the Series allocated to the Subadviser for
management hereunder.
(b) During the term of this Agreement, the Subadviser will pay all
expenses incurred by it in connection with its activities
under this Agreement other than the cost of purchasing
securities (including brokerage commissions, if any) for the
Series.
6. Representations and Warranties. The Subadviser hereby represents and
warrants as follows:
(a) The Subadviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
(b) The Subadviser has all requisite authority to enter into,
execute, deliver and perform its obligations under this Agreement;
(c) This Agreement is legal, valid and binding, and enforceable in
accordance with its terms; and
(d) The performance by the Subadviser of its obligations under this
Agreement does not conflict with any law to which it is subject.
7. Covenants. The Subadviser hereby covenants and agrees that, so long
as this Agreement shall remain in effect:
(a) The Subadviser shall remain either registered under, or exempt
from, the registration provisions of the Advisers Act;
(b) The performance by the Subadviser of its obligations under this
Agreement shall not conflict with any law to which it is then subject;
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(c) The Subadviser will carry out appropriate compliance procedures
necessary to the operation of the Series as the Subadviser and the Manager may
agree; and
(d) The Subadviser will manage the Series in conformity with all
applicable rules and regulations of the Securities and Exchange Commission in
all material respects and so that the Series will qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code.
8. Reports by the Subadviser and Records of the Series. The Subadviser
shall furnish the Manager monthly, quarterly and annual reports concerning
transactions and performance of the Series, including information required to be
disclosed in the Corporation's Registration Statement, in such form as may be
mutually agreed, to review the Series and discuss the management of it. The
Subadviser shall permit the financial statements, books and records with respect
to the Series to be inspected and audited by the Corporation, the Manager or
their agents at all reasonable times during normal business hours. The
Subadviser shall immediately notify and forward to both the Manager and legal
counsel for the Series any legal process served upon it on behalf of the Manager
or the Corporation. The Subadviser shall promptly notify the Manager of any
changes in any information concerning the Subadviser of which the Subadviser
becomes aware that would be required to be disclosed in the Corporation's
registration statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Subadviser agrees that all records it maintains for the Corporation are the
property of the Corporation and further agrees to surrender promptly to the
Corporation or the Manager any such records upon the Corporation's or the
Manager's request. The Subadviser further agrees to maintain for the Corporation
the records the Corporation is required to maintain under Rule 31a-1(b) insofar
as such records relate to the investment affairs of the Corporation. The
Subadviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records it maintains for the Corporation.
9. Continuance and Termination. This Agreement shall remain in full
force and effect through September 30, 2003, and is renewable annually
thereafter by specific approval of the Board of Directors of the Corporation or
by the affirmative vote of a majority of the outstanding voting securities of
the Series. Any such renewal shall be approved by the vote of a majority of the
Directors of the Corporation who are not interested persons under the 1940 Act,
cast in person at a meeting called for the purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time by the Directors,
by vote of a majority of the outstanding voting securities of the Series, or by
the Manager or by the Subadviser upon 60 days written notice, and will
automatically terminate in the event of its assignment by either party to this
Agreement, as defined in the 1940 Act, or upon termination of the Manager's
Investment Management Agreement with the Corporation. In addition, the Manager
or the Corporation may terminate this Agreement upon immediate notice if the
Subadviser becomes statutorily disqualified from performing its duties under
this Agreement or otherwise is legally prohibited from operating as an
investment adviser.
10. Voting Rights. The Manager shall be responsible for exercising any
voting rights of any securities of the Series.
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11. Indemnification. The Subadviser agrees to indemnify and hold
harmless the Manager, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Manager and each person, if
any, who, within the meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), controls ("controlling person") the Manager, against any and all
losses, claims damages, liabilities or litigation (including reasonable legal
and other expenses), to which the Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, under any other statute, at common law or otherwise, arising out
of Subadviser's responsibilities as portfolio manager of the Series (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by the Subadviser, any of the Subadviser's employees or
representatives or any affiliate of or any person acting on behalf of the
Subadviser, or (2) as a result of any untrue statement or alleged untrue
statement of a material fact contained in a prospectus or statement of
additional information covering the Series or the Corporation or any amendment
thereof or any supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, if such a statement or omission was made in
reliance upon written information furnished by the Subadviser to the Manager,
the Corporation or any affiliated person of the Manager or the Corporation
expressly for use in the Corporation's registration statement, or upon verbal
information confirmed by the Subadviser in writing expressly for use in the
Corporation's registration statement or (3) to the extent of, and as a result
of, the failure of the Subadviser to execute, or cause to be executed, portfolio
transactions according to the standards and requirements of the 1940 Act;
provided, however, that in no case is the Subadviser's indemnity in favor of the
Manager or any affiliated person or controlling person of the Manager, or any
other provision of this Agreement, deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
The Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of the Subadviser and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Subadviser, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Subadviser or such affiliated person or controlling person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of the Manager's responsibilities as
investment manager of the Series (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by the Manager, any of the
Manager's employees or representatives or any affiliate of or any person acting
on behalf of the Manager, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or statement of
additional information covering the Series or the Corporation or any amendment
thereof or any supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, if such a statement or omission was made by
the Corporation other than in reliance upon written information furnished by the
Subadviser, or any affiliated person of the Subadviser, expressly for use in the
Corporation's registration statement or other than upon verbal information
confirmed by the Subadviser in writing expressly for use in the Corporation's
registration statement; provided, however, that in no case is the Manager's
indemnity in favor of the Subadviser or any affiliated person or controlling
person of the Subadviser, or any other provision of this Agreement, deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misconduct, bad faith or gross
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negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
12. Certain Definitions. For the purposes of this Agreement, the "vote
of a majority of the outstanding voting securities of the Series" means the
affirmative vote, at a duly called and held meeting of shareholders of the
Series, (a) of the holders of 67% or more of the shares of the Series present
(in person or by proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Series entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders of more than
50% of the outstanding shares of the Series entitled to vote at such meeting,
whichever is less.
For the purposes of this Agreement, the terms "interested person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
For the purposes of this Agreement, the terms "assets", "net assets",
"securities", "portfolio securities" or "investments" of the Series shall mean,
respectively, such assets, net assets, securities, portfolio securities or
investments which are from time to time under the management of the Subadviser
pursuant to this Agreement.
13. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered or sent by
pre-paid first class letter post to the following addresses or to such other
address as the relevant addressee shall hereafter notify for such purpose to the
others by notice in writing and shall be deemed to have been given at the time
of delivery.
If to the Manager: DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
If to the Corporation: XXXXXXX NEW EUROPE FUND, INC.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
If to the Subadviser: DEUTSCHE ASSET MANAGEMENT INVESTMENT
SERVICES LIMITED
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Attention: Xxxxxxx Xxxxxx
14. Instructions. The Subadviser is authorized to honor and act on any
notice, instruction or confirmation given by the Corporation or Manager in
writing signed or sent by one of the persons whose names, addresses and specimen
signatures will be provided by the Corporation or Manager from time to time.
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15. Law. This Agreement is governed by and shall be construed in
accordance with the laws of The Commonwealth of Massachusetts in a manner not in
conflict with the provisions of the 1940 Act.
16. Limitation of Liability of the Corporation, Directors, and
Shareholders. It is understood and expressly stipulated that none of the
Directors, officers, agents, or shareholders of the Corporation shall be
personally liable hereunder. It is understood and acknowledged that all persons
dealing with the Series must look solely to the property of such Series for the
enforcement of any claims against such Series as neither the Directors,
officers, agents or shareholders assume any personal liability for obligations
entered into on behalf of the Corporation or the Series. No series of the
Corporation shall be liable for the obligations of any other series.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this instrument
to be signed in duplicate on its behalf by the officer designated below
thereunto duly authorized.
Deutsche Investment Management Americas Inc.
Attest: /s/Xxxxxxxx Xxxxxxx By: /s/Xxxxxxx X. Xxxxxx, Xx.
----------------------------------- --------------------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Managing Director
Deutsche Asset Management Investment
Services Limited
Attest: /s/Xxxxxxx Xxxxxxxx By: /s/Xxxx Xxxxxx
----------------------------------- --------------------------------------------
Name: Xxxx Xxxxxx
Title: Director
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EXHIBIT A
---------
TO
SUBADVISORY AGREEMENT
DATED 30TH SEPT, 2002
BETWEEN
DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC. AND
DEUTSCHE ASSET MANAGEMENT INVESTMENT SERVICES LIMITED
Series Net Assets Subadvisory Fee
------ ---------- ---------------
Xxxxxxx New Europe Fund On the first $250 million 0.560%
On the next $250 million 0.550%
On the next $500 million 0.530%
On amounts over $1 billion 0.490%
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